Santa Paula Council Narrows Rate Increase Options to Two Alternatives

By Sheryl Hamlin

The August 21, 2019 Santa Paula City Council lasted until about 11:00 pm with the most complicated material, the rate increase, scheduled to the later part of the meeting.

Bond Presentation

During the Presentations section of the meeting, Philip Curls from Hilltop Securities presented Santa Paula’s Debt Overview. Here are a few highlights:

-Santa Paula still owes $43,550,000 on the $55,000,000 bonds sold in 2010, all of which was spent, but the city must pay debt until 2040 including bond premiums and sinking fund maintenance.
-Curls projects $640,000 annual savings from the refinancing of the water bonds annually yielding a savings of over $8 million over the remaining life of the bonds.
-Wastewater has three series outstanding as follows: 2010A ($4,950,000), 2010B ($5,350,000), 2015A($65,355,000 ). All three total slightly less than $5 million in payments. The projected savings is $220,000 annually on the refinancing.

-Curls proposed three debt projects for 2020: $6 million of street improvements, Wastewater Series 2010 A&B refunding and Water Fund Series 2010 refunding.

-Curls also provided timelines and potential fees.

To download the entire presentation, click here: Santa Paula CC HilltopSecurities Debt Presentation 8.21.2019 (Final) (00000002)

Rate Study Presentation

Greg Clumpner from NBS presented an updated analysis, changing the growth rate from 1% to 2% based on input from former Mayor Ginger Gherardi given at the Community meeting and restructuring the debt per the Hilltop recommendations.

The NBS analysts also worked with Finance Director Cristy Ramirez who compiled history on all single family residential customers from which she could calculate a “winter usage”. This is important because the winter water usage is theoretically less than other months so would represent more closely the actual sewer usage with less landscaping water. Using this the NBS model can now fine tune the rates based on usage.

Director Ramirez also announced that the history data will be on-line so that customers and service staff can access for questions. She also said that a new bill will be forthcoming which reflects the usage histories.

To download the entire presentation, click here: NBS_20190821_rates

Discussion

Council Member Sobel was concerned about aggressive growth rates which may not occur. There was also discussion about paying for emergency repairs. The consultant said that these would be paid from the fund, but unfortunately other than Alternative 1, there were no specific numbers presented for the contribution to the funds each year.

Council Member Juarez pointed out that the scant attendance at the public meetings suggested that residents were resigned to a rate increase.

Meter size was discussed extensively. The city had swapped the 5/8” meters for the ¾” meters but had not reflected the change in the usage, which will now be corrected in the new billing.

There was a question about projected employee cost increases. Director Ramirez informed the council that enterprise costs have increased due to the pay raises from the MOU because in addition to the raises which are apportioned to the enterprises, the employee’s accrued liability is also apportioned to the sewer or water fund.

Startup procedures with the new usage history was discussed. Director Ramirez said that this will be included in the new bill.

Public Comments

Former Mayor Gherardi reminded that 15% annually doubles in 5 years, which is the rate proposed in Alternative 2. She also suggested cutting costs in the sewer plant.

Sheryl Hamlin said no monies should be borrowed for long term capital projects of sewer and water until a regional plan is developed. Santa Paula cannot fund these projects alone and the proposed pipeline to Limoneira does not solve future requirements. A regional plan is needed. One such award winning regional plan is described here.

Voting

Council narrowed the two choices for the next meeting to Alternative 2 and Alternative 3. This meeting will be in September and be posted.

Note that Alternative 2 includes the 15% annual rate increase. When asked how this was derived, the consultant said that staff provided this number and that his firm did not derive it. Note too that Alternative 3 does not include any funds or plans for future capital projects at the wastewater plant.

To read past articles on the rate increase saga, click here.

To watch the video, click here.

For more information on author click sherylhamlin dot com


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